Buy This One Stock Before The End Of The Year

Dow Could Hit The 40,000 Point Level

The Dow Jones Industrial Average just set a new record. It crossed the 30,000 mark for the first time ever last month. While the number itself is symbolic, the rally we’ve seen in recent months has been nothing short of incredible.

The Dow Jones Industrial Average just set a new record. It crossed the 30,000 mark for the first time ever last month. While the number itself is symbolic, the rally we’ve seen in recent months has been nothing short of incredible.

By Chris Igou, analyst, True Wealth

The Dow Jones Industrial Average just set a new record…

It crossed the 30,000 mark for the first time ever last month. While the number itself is symbolic, the rally we’ve seen in recent months has been nothing short of incredible.

The Dow is up 63% in just nine months since the March bottom. And that blistering rally has a lot of folks questioning what happens next.

My answer is simple… Dow 40,000!

That’s not a wild prediction, either. It’s simply a bet that history will prove to be correct once again.

You see, the 30,000 level is a major breakout. And when major breakouts happen, more gains usually follow. In fact, 100 years of data show us more outperformance is likely from here.

That means Dow 40,000 could be the next stop. And you really want to own stocks now.

Let me explain…


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The Dow has made an incredible move higher in recent months. Again, it’s up 63% since bottoming in March.

That kind of rally is amazing for a major index. And it’s even more impressive given what has happened in the economy and around the world during that time.

Now, you might think that the rally has to cool down soon… or that a pullback is likely after such a strong run higher. You might even think that hitting the 30,000 milestone is itself a warning sign of a coming decline.

History says that’s not the case. Instead, buying after new highs is a good thing.

Since 1920, the Dow has continued to outperform after hitting a new 52-week high. And as the chart below shows, we have this exact setup today. Take a look…

This rally has been strong. The Dow is back in uncharted territory as it hits new all-time highs. But this breakout doesn’t mean the rally is over…

Buying after similar new highs has led to winning trades 74% of the time. And history shows that at times like these, you can expect to outperform in the months ahead. Take a look at the table below…

The Dow has returned about 6% a year since 1920. But it performs even better after new 52-week highs like today’s…

Similar cases have led to a nearly 5% gain in a typical six-month period. And they can lead to an 8% gain over the next year. That’s significant outperformance.

Those are the gains you might normally see after this kind of setup. But if the trend continues like it is right now, the gains could be much higher… The biggest move after one of these instances was a 48% gain. That would be more than enough to eclipse the 40,000 level in the Dow.


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I’m not betting that will happen in the next year. We can’t know for sure what’s going to come next for U.S. stocks. But the smart bet isn’t on a crash… It’s on higher highs from here.

The Dow has plenty of room to run. And 40,000 could be the next stop. Either way, you want to own stocks now.

How Much Tesla Will Move the Market?

Tesla – the electric-car maker and one of the most polarizing stocks in decades – is stepping into the big leagues. So today, we’re going to answer a simple question: “Just how much sway will Tesla have over the market?”

By Vic Lederman, analyst, True Wealth

Tesla – the electric-car maker and one of the most polarizing stocks in decades – is stepping into the big leagues.

Standard and Poor’s is adding Tesla to the S&P 500 Index. And the media’s take on it can be summed up with one word… “finally.”

But it only takes a passing knowledge of the company to know that this assessment is a little dubious. The company is the poster child for eccentric leadership. And its share price is highly volatile.

Despite that, the company will be the largest to ever join the S&P 500. In fact, it looks like it will be a top 10 holding.

That means that if you own anything that tracks the S&P 500, you’ll soon be a Tesla shareholder. But don’t overreact.

You might find Tesla’s leadership as distasteful as I do. But that doesn’t mean you should alter your portfolio to avoid it.

Remember, the S&P 500 is weighted by market capitalization. Simply put, the bigger the company, the more influence it has over the index.

So today, we’re going to answer a simple question: “Just how much sway will Tesla have over the market?”

Let’s get right into it…


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Tesla’s market capitalization is more than $460 billion as I write.

That puts Tesla in the top 10 S&P 500 companies. But how much sway will that give Tesla over the index?

Well, health giant Johnson & Johnson (JNJ) and financial-services firm JPMorgan Chase (JPM) are near Tesla in the top 10, each with market caps around $400 billion. Each company accounts for about 1.3% and 1.2% of the S&P 500, respectively. So, we can expect Tesla to end up with a weighting of over 1% based on this.

Consumer-electronics giant Apple (AAPL), for comparison, is at the top of the pile. It makes up nearly 6.5% of the S&P 500… Or about five times more than where Tesla will likely end up.

Still, when you stop to think about it… it becomes obvious that the top companies really do account for the majority of the market.

In fact, the top 15 companies make up 32% of the S&P 500. And the top 50 account for more than half. The bottom 50 account for just 1% of the S&P 500.

So clearly, the larger companies are much more important to the performance of the market. But if you’re not a Tesla fan, how much should you worry about it joining the index? And to our greater question… how much will Tesla move the market?


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The answer is: not much.

All it takes to see this is a little bit of math.

Even on a 25%-day for Tesla (in either direction), it would only move the market about 0.25%. Tesla is volatile, unusually so. So those 25%-days do happen. But once you put it into the broader context of the index, that volatility gets watered down.

So, is it possible that this poster child for eccentricity will move the market? Sure. On its biggest days, Tesla will contribute to the volatility of the S&P 500.

But on most days… it won’t matter at all.

Recent Pullback Is a Bullish Sign for Stocks

Right now, a lot of folks are worried that stocks are about to start another big decline. That’s a possibility, of course. But as we’ll show you today, it’s not the most likely outcome. In the weeks and months following our 50-DMA breakdown signal, stocks were higher across all time frames, on average. And stocks performed better more often than in all market conditions. Our study shows that rather than this being the time to sell, stocks are likely a good buy today.

Right now, a lot of folks are worried that stocks are about to start another big decline. That’s a possibility, of course. But as we’ll show you today, it’s not the most likely outcome. In the weeks and months following our 50-DMA breakdown signal, stocks were higher across all time frames, on average. And stocks performed better more often than in all market conditions. Our study shows that rather than this being the time to sell, stocks are likely a good buy today.

By Ben Morris and Drew McConnell, editors, DailyWealth Trader


On Friday, the benchmark S&P 500 Index broke down…

It dropped below its intermediate-term trend line – its 50-day moving average (50-DMA) – for the first time in four months.

The trend is still up. But a lot of investors and traders start to worry when stocks fall below this widely followed level.

Last week, though, we told that this pullback could actually be a great buying opportunity…

Timing your trades isn’t always about nailing the exact right moment to get in… If you can simply identify higher- and lower-risk entry points – and take action when your risk is reduced – you’ll give yourself a major advantage in your trading.

With that in mind, the question we’re asking today is, “Is right now a higher- or lower-risk moment to buy stocks?”

The answer might surprise you…


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To help us answer this question, we looked at similar occurrences in the S&P 500 over the past 50 years. Specifically, we looked at the S&P 500’s returns following its first break below its intermediate-term trend line in at least three months.

In the chart below, you can see when this happened on Friday…

A lot of traders consider a break below the 50-DMA to be a bad sign. But let’s draw our conclusions from the numbers…

Over the past 50 years, the S&P 500 has held above its 50-DMA for at least three months 39 other times. (Friday was the 40th time.) The table below shows how the index performed following the first day that it closed below its 50-DMA…

On average, stocks climbed across all time frames. In the following two weeks, stocks were higher about 60% of the time. One and two months later, that percentage jumped to about 70%. And three months later, stocks were higher more than 80% of the time.

Those are good odds, especially when we compare them with the S&P 500’s “normal” performance…

The table below shows the same metrics for the S&P 500 for the past 50 years with no limiting criteria. In other words, the first number in the first row is the average two-week return for the S&P 500 over the past 50 years.

You might be surprised to see that the S&P 500’s average and median returns were better than normal after it broke below its 50-DMA across all time frames. The percentage of the time that stocks were up was better after the breakdown, too.

How can we explain this?

Well, if the S&P 500 has held above its 50-DMA for at least three months, it typically means the stock market is in a strong uptrend. And when the market is in a strong uptrend, you want to own stocks.

These results suggest that one of the best times to buy stocks in a strong market is after a pullback, like when the S&P 500 drops below its 50-DMA… as it did on Friday.

Here’s our takeaway…


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Right now, a lot of folks are worried that stocks are about to start another big decline. That’s a possibility, of course. But as we showed you today, it’s not the most likely outcome.

In the weeks and months following our 50-DMA breakdown signal, stocks were higher across all time frames, on average. And stocks performed better more often than in all market conditions.

Our study shows that rather than this being the time to sell, stocks are likely a good buy today.

It probably doesn’t feel like the right thing to do right now, but if you have some cash on the sidelines, you may want to consider putting it to work. At the very least, don’t exit your bullish positions right now unless they’ve triggered your stop losses.

We can’t promise you that today is the perfect day to buy stocks. But we can tell you – with 50 years of history backing us up – that your risk in the stock market is reduced. And generally, that’s the time to buy, not sell.

Our advice for stocks traders and investors right now is to stick to your stop losses and to stay long.

If You’re Not Bullish Here, You’re Not Paying Attention

There’s a big question on every investor’s mind this week… Will the stock market find its footing? Or continue down a slippery slope?

By Jason Bodner, editor, Palm Beach Trader

There’s a big question on every investor’s mind this week…

Will the stock market find its footing? Or continue down a slippery slope?

Some folks will point to the pandemic-battered economy and say there’s no way stocks can keep running higher. A higher stock market doesn’t agree with their feelings about the economy. Or the mainstream news blaring out of their television.

But in Palm Beach Insider, we don’t let emotions or preconceptions dictate our investment path. We let data do the talking – specifically, our Big Money Index.

And today, I’ll show you what it’s telling us about the stock market over the next few weeks – and further down the line…


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Data Beats Doom and Gloom

In March, guided by our Big Money Index, I told anyone who would listen to buy stocks. Meanwhile, the mainstream media was calling for a new Great Depression.

What happened next? The Invesco QQQ Trust (QQQ) – an exchange-traded fund (ETF) of tech stocks – rallied 84% trough to peak.

It just goes to show… you shouldn’t believe everything you hear. The media wants you afraid and pessimistic. That’s because their advertisers pay them money to have viewers. And when viewers are happy and stress-free, they don’t watch the news.

Now, with a bit of stock weakness, the news is coming out with plenty more negative fodder.

So, are we headed for the reckoning that many feel is long overdue? No. As I said last week, this market is just having a much-needed pullback. And that’s mainly due to profit taking in the tech sector.

For months now, new day-traders armed with stimulus checks have pushed up tech shares to a parabolic rise. I fully believe our future is tech-driven, but the recent price rise needed a come-back-to-earth moment. This is it.

And while the tech sector took headlines in last week’s selloff, only 32% of stocks in the sector experienced net selling in the past seven trading sessions.

The real damage is in energy. 67 out of 58 stocks we track were net sold last week. (That’s not a typo. It means that several of the energy stocks we track were sold for multiple days – and it was only a 4-day week. Therefore 116% of the energy sector saw big-money selling.)

In any case, big money is coming out of tech and energy and sloshing back into discretionary, healthcare, and some staples stocks. (You’ll remember I tipped you off to this rotation a couple weeks ago.)

On a broader level, the market at large is clearly seeing less demand for stocks. But the Big Money Buy/Sell Index saw this coming…


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The Big Money Index Is Heading Back to Its “Sweet Spot”

If you’re new to Palm Beach Insider, the Big Money Buy/Sell Index (BMI for short) is our proprietary system to spot big-money buying and selling in the broad market.

And as we’ve observed for months now, the BMI has steadily fallen from its June peak – even as the market trudged higher.

Remember, when a market gets overbought, it can stay that way for a while. (This time the BMI established a 30-year record, at 84 days overbought.)

But since that peak, the big money demand for stocks has come back to earth… And we’re now officially out of overbought territory:

image

Now, when the index level dips to 25% (the green line in the chart) or lower, sellers have taken the reins, leading the markets into oversold territory. And when it hits 80% (the red line) or more, it means buyers are in control and markets are overbought.

Generally speaking, we like when the BMI is gently trending higher – but between the green and red lines. It means there’s a healthy balance between buying and selling, with a bias toward buying. That’s the “sweet spot” for a bull market. These conditions allow a gentle up-trending market to continue for a long time.

This year has been nothing like that. We came from extreme overbought in January, to extreme oversold in March, to extreme overbought from May all the way to September. 2020 will mark an historic year for humanity, but also for the data we collect.

We may not see a market environment like this for years, possibly decades. Or, it may happen again next year. That’s the thing… We never know what’s to come. All we can do is interpret the data and react accordingly.

And right now, our data indicates a waning appetite for stocks in the short-term. I suspect the next few weeks will be choppy and form a base.

After that, though, buying will come in again to lift markets in the late fall and early winter.

How do I know this?


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Nowhere Else to Turn

The inescapable truth is this: Interest rates will remain at near-zero for the foreseeable future.

Doing some number crunching, I found that owning the S&P 500 for its dividends is 244% better than owning the 10-year Treasury for its yield (after taxes).

INVESTMENT AMOUNT INVESTED YIELD MAX
TAX RATE
RETURN BEFORE
TAX
TAX
OWED
RETURN AFTER
TAX
10-YEAR TREASURY $100 0.67% 40.8% $0.67 $0.27 $0.40
S&P 500 $100 1.79% 23.8% $1.79 $0.43 $1.36
Advantage of owning stocks over bonds 244%

Everyday investors, seeing their “high-yield” savings accounts and Treasury bond rates whittle down to practically nothing, understand this all too well.

There’s basically nowhere else for investors to grow their money but stocks. That will encourage further stock investment over time.

With these factors at play, it’s clear the market isn’t headed for disaster. It’s headed for a few weeks or months of chop before another bull run.

That means it’s time to have your shopping list ready, and to scale into your favorite positions on down days. That’s a sustainable strategy that pays off massively over time.


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I’ve haven’t been this excited to buy stocks in months…

You see, the BMI isn’t just a way to see if the market is too hot or too cold. It tells me, specifically, which stocks the biggest institutions are buying right now.

In the past, the signals I get from this system have put my readers into stocks that the mainstream media didn’t pick up on until much later… After they’d already run up hundreds of percent.

My system works so well because it cuts out the emotion and “white noise” of the market. It dials in on where the big money is placing their bets… and discovers outlier stocks before they race higher. Find out more here.

A New Bull Market Is Just Getting Underway

The Biggest Opportunity of the Decade Is Starting Now. A new bull market is just getting underway. It has the potential to overshadow the tremendous gains the U.S. market saw over the last decade.

By Brian Tycangco, analyst, True Wealth Opportunities: China

A new bull market is just getting underway.

It has the potential to overshadow the tremendous gains the U.S. market saw over the last decade.

Indeed, this very same market helped a small group of investors pull down three times the returns in the S&P 500 Index during one of Wall Street’s best periods in history.

Now, I don’t say this lightly. But this could be the last opportunity you’ll have to profit from this kind of boom…

There’s good news, though. I’m perfectly situated to show you what opportunities lie ahead. The reason is simple… My entire life has prepared me for this moment.

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I have been living smack-dab in the middle of this massive opportunity – a market that has largely been off-limits to investors like you for too long.

And I’ve seen for myself the life-changing gains that are possible…

It started with my dad, who taught me about the stock market when I was just barely a teenager. He was a surgeon by profession. But that wasn’t exactly a path to riches in the Philippines, where we lived.

Instead, it was his stock investments in this part of the world that afforded us a beautiful home worth millions of dollars… not to mention a huge diamond ring for my mother.

I became instantly hooked on investing…

After graduating with a degree in economics, I started learning the ropes. I paid my dues, working for scraps as a stock trader.

In a couple of years, I was doing research for banking giant BNP Paribas analyzing food and beverage companies. Now, those were much more rewarding times.

The pay was better than what I made as a professional stock trader. I managed to make enough money to take my wife (then girlfriend) out on some nice dates. It was also during this time that I pointed our firm’s investors to a little-known company called Jollibee Foods (PH: JFC).

You may have never heard of Jollibee Foods. And sure, that’s understandable… It only went on to clobber McDonald’s in the Philippines – a country with 100 million consumers.

Today, Jollibee is still beating McDonald’s in the Philippines. It has even branched out overseas, including many parts of the coastal U.S.

Along the way, the company has managed to buy up Burger King’s local partner, as well as build the Philippines’ largest pizza chain.

Investors who got in early could have made as much as 3,325%. Meanwhile, investors in McDonald’s did only one-third as well.

That’s the kind of opportunity setting up in my part of the world… in emerging markets.

And importantly, I’m not talking about China. Instead, I’m talking about countries and companies set to become the “Next Chinas”…

These companies are set to rise like China’s greatest companies have over the last decade, as Asia’s emerging markets follow China’s path to success and dominance.


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There’s a lot to this story. So tomorrow, I’ll give you a few more details on what’s going on… and why today’s opportunity is so incredible.